The EU have firmly put their foot down over the Irish border

Philip Hammond

Failure to agree that issue could jeopardise a transition period happening, and at worst could mean a "cliff edge" Brexit.

Phase 1 was about the core terms of a divorce decree, still unfinished. Also on the menu, close co-operation on defence and a deal on aviation.

The Taoiseach Leo Varadkar is holding talks with European Council President Donald Tusk in Dublin. "On the contrary, Britain should be our closest neighbor and we want to remain friends and partners after Brexit", said Donald Tusk at a joint press conference with Luxembourg Prime Minister Xavier Bettel.

However, executives are anxious that Brexit could impose tariffs and customs checks between Britain, Europe's second-largest auto market, and the European Union, snarling up supply chains, adding costs and risking the viability of plants. This would allow both sides some leeway to set their own rules to achieve those goals.

After the President said the U.S. economy could boom by hiking tariffs on imported aluminium and steel, Mr Tusk said: 'President Trump has said, "Trade wars are good and easy to win".

May used her speech last week to call for an EU-UK deal that worked "more fully than any free trade agreement anywhere in the world today", while acknowledging it was time to face "hard facts" about the economic consequences of Britain's shock 2016 vote to leave.

He insisted that, because of Mrs May's red lines of leaving the EU's single market and customs union, stopping free movement of people and escaping from the European Court of Justice, the only plausible option was a free-trade deal similar to Canada's.

"It is incredible beyond belief that the European Union has the gall to ask for free access to British fishing waters once we have left the EU".

The EU has said Britain can not continue to have free access to the single market because it has ruled out continuing to meet its membership conditions - chief among them the free movement of workers from other EU countries to Britain.

And what is a political declaration anyway?

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According to the MEPs' view, the non-EU countries should not have the same benefits or access the market, as the European members. Or is it little more than a list of mutually agreeable, but hardly binding, aspirations?

"This is not a zero-sum game, where any loss of market share in London is automatically a gain to another European Union capital", he said during a speech at HSBC in London.

Lawmakers are reacting to the EU's opening negotiating position, published on Wednesday, with Trade Secretary Liam Fox and Shadow Chancellor John McDonnell both speaking in London.

Mr Tusk said: "A "pick and mix" approach for a non-members state is out of the question". Time for Mrs. May to handbag Barnier and say we will take our waters back. "It's simply not in our interest", he added.

Presenting the guideline, Mr. Tusk said: "I propose that we aim for a trade agreement covering all sectors and with zero tariffs on goods".

The European Council president struck a conciliatory but realistic tone on a possible future relationship, as he unveiled his draft guidelines for the negotiation of post-Brexit ties.

Even as the wide gap in expectations and interests has grown more apparent, the end-game of Brexit seems increasingly murky. The EU pointedly doesn't include it in their plans, though the EU27 say their positions could "evolve" if the United Kingdom position changes.

In the coming months that may prove the most important paragraph of all.

"Being outside the customs union and the single market will inevitably lead to frictions", the draft warns. "We find that assumption to be deeply unjust". Anna Soubry, a pro-European, was just as warm, saying there was no doubting the prime minister's determination to get the best deal for her country.

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